Industry Insight: Crowdfunding Videos

Industry Insight: Crowdfunding Videos

Funding is one of the more stressful aspects of starting a business. Determining how much funding is required and what type of funds will be accepted are the easier processes; determining where funds will come from is far more challenging. You could try a bank, pitch to angel investors, or you could ask the Internet…

Crowdfunding has grown to enormous popularity in recent years, and has helped entrepreneurs fund virtually any venture idea, from comics to hot sauce.  While Kickstarter may be the most well known, it is just one of many crowdfunding sites, and the first of two that will be explained in this post. Regardless of platform, one thing remains constant: Crowdfunding videos make or break your funding goals.

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Kickstarter was started in 2009. Since then, over 6.5 million people have pledged over $1 billion to start independent projects. Project creators keep 100% of the ownership of the idea, product, service, etc., and Kickstarter retains a small percentage of the total revenue raised. This type of agreement is extremely beneficial for artists, filmmakers, and other creatives, as it allows for the funding of ideas without relinquishing control over the vision of the work.

Here’s how it works: The creator designs the campaign, uploads pictures and, most importantly, crowdfunding videos, and sets the campaign goal as well as rewards for donors. Then, the campaign is marketed to the taste of the creator. Social Media tends to be popular. If the funding goal is reached, Kickstarter retains 5% by way of fees and the campaign creator receives the other 95%. However, Kickstarter is all or nothing. If the goal is not reached, pledges are not charged, and the campaign receives no money. No fees are collected on campaigns that fall short on funding.

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Another popular crowdfunding site is Indiegogo.com. Started in 2008, Indiegogo has serviced the same market as Kickstarter with one minor major difference. When creating a campaign with Indiegogo, you are primed to select from either a fixed funding campaign or a flexible funding campaign. The fixed funding campaign works identically to Kickstarter’s funding model, although the fee is less for Indiegogo, at 4%.

What truly makes Indiegogo special among crowdfunding models is it’s flexible funding campaign option. With flexible funding, you will receive the money donated to your campaign regardless of whether the campaign goal is met. Say you were a little ambitious with your goal, and raised 90% of the total funding. With Kickstarter, you would lose that 90%, as the campaign goal was not met. With Indiegogo, you would keep that 90% of total. The only caveat is Indiegogo retains an additional 5%, totaling 9%, should a flexible funding campaign fail to reach its goal.

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Whichever platform you choose to seek funding for your project, start a conversation with one of our video producers about your crowdfunding videos. We know what works, what doesn’t work, and what needs to be in your video.